The Fed’s no-surprises approach to monetary policy

I’ve got to admit that I really have no opinion whatsoever on the adequacy or inadequacy of the Fed’s quarter-point rate cut (clearly I have no future in monetary policymaking). But it is interesting that the rate cut and its size were pretty much what recent Fed economic forecasts and pronouncements by Fed officials had hinted at for weeks. Wall Street was still disappointed: A “large minority of economists,” as the WSJ put it, had expected a half-point cut. On the whole, though, the Bernanke Fed telegraphed its decision pretty well. The era of no- (or at least few-) surprises monetary policy may finally be upon us. So now we can find out if it’s really such a great idea.